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A current Domino’s promotion promises to deliver you a “Free Emergency Pizza” when life gets you down. Sadly, the pizza chain’s own C-suite executives could probably use a free medium pepperoni pie or two themselves.
On Thursday, shares of Domino’s Pizza Enterprises, the Australia-based international franchisee of the US mothership, plummeted 30% amid an ongoing and semi-disastrous plight to bring its pizza to the world — erasing some $1.5 billion in market value.
Pie in the Sky
Domino’s Enterprises, which holds the branding rights to the US chain in various international markets, is in trouble. The problem? Quite a few international markets have seemingly no interest in Americanized fast-food pizza.
During the pandemic, when take-out pizza was a no-brainer salve to shelter-in-place isolation, Domino’s used its popularity to fuel a massive expansion into countries like France, Germany, and Japan. But the aggressive maneuvering is coming back to bite the company, as international eaters display weaker appetites than expected:
- The company announced Thursday that pretax net profit in the previous six-month period would be between $87 million and $90 million, compared to $105 million last year. Sales have been particularly weak in France and Japan, where the company has invested heavily, according to reporting from The Guardian.
- After trading at just under $20 for most of the year, the company’s share price plummeted to around $13 — a far cry from the $160 peak it hit mid-pandemic. Worse, analysts at Citi downgraded their rating from “buy” to “neutral,” while peers at UBS maintained a “sell” rating.
Blame America: In a call with analysts and investors Thursday, Domino’s managing director Don Meij offered up one excuse: geopolitical conflict, and the US role therein, declaring “It’s well-publicized that American brands in Asia, and I largely talk to Malaysia in this case, have been affected by what’s happening in the Middle East right now.” All pizza is political.